Bonn faces legal challenge over US aviation deal

Date: 08/02/1996

By Fiona McHugh

GERMANY may end up in court if it decides to go ahead with a bilateral 'open skies' accord with the US which was agreed in principle last week.

Although keen to play down the significance of the aviation deal, European Commission officials admitted Bonn would face the threat of legal action in the European Court of Justice if it carried through with its plan to open German airports to US carriers.

Transport Commissioner Neil Kinnock has been fighting an increasingly uphill battle for the right to negotiate a single EU-US air agreement on behalf of all 15 member states, insisting that bilateral accords with third countries disrupt the single market and are illegal.

Germany's move, which will give US carriers increased access to one of the Union's biggest air passenger markets, represents a major blow to Kinnock's ambitions. This is the eighth in a series of bilateral accords Washington has succeeded in striking with EU countries in the last year, giving US airlines the kind of access to the EU market not available to Europeans on American soil.

Claiming that the seven agreements reached last year - between the US and Austria, Belgium, Denmark, Sweden, Luxembourg, Finland and the UK - were putting moves towards a genuine single market for air transport at risk, Kinnock retaliated by threatening legal action and drew up a report showing the disadvantages of negotiating on an individual basis rather than as a bloc. The Commissioner has not carried out his threat so far, but nor, for that matter, has his tactic worked, as exemplified by the deal struck between the US and Germany last week.

The Commission claims the US is waging a 'divide and rule' war against the EU, winning access to the biggest and most attractive markets via the back door of smaller ones. “What is the point in a bloc if we do not use the muscle which it offers you to negotiate better deals?” said one of Kinnock's aides.

If, as the Commission claims, 'divide and rule' is the plan, then officials in Washington must currently be exchanging hearty congratulations on Germany's capitulation.

The only two crucial markets which still limit access to American carriers are France and, more importantly, the UK where Europe's busiest airport, Heathrow, is located. While the UK has signed a mini-deal with Washington, talks aimed at widening its scope collapsed in the autumn after London refused increased access to Heathrow.

US officials are hoping that the agreement with Bonn will put pressure on London to follow suit. But UK diplomats poured cold water on that optimistic thought. “They want direct access to Heathrow, so we still have a very strong card in our hand. We will continue to play hard ball,” said one.

Speaking at a conference after the US deal was struck, German Transport Minister Matthias Wissman denied that Washington had forced Bonn to accept an unfavourable deal by holding a crucial joint venture between Lufthansa and United Airlines hostage to the liberalisation talks. The two carriers are currently seeking anti-trust immunity, a status which other global alliances, such as Northwest/KLM and British Airways/USAIR already enjoy.

Despite Wissmann's denials, the feeling in Brussels is that the US held Germany over a barrel and emerged the victor as a result. They point to the fact that Bonn insisted it would sign the open skies agreement only after the Lufthansa and United deal had been cleared by US competition authorities.

Similar shotgun tactics were used by Washington in its negotiations with the Netherlands last year, when it used The Hague's eagerness to see KLM, the Dutch carrier, and Northwest Airlines win immunity from anti-trust laws to get an aviation agreement.

The Commission is putting a brave face on the latest developments, but officials realise that the longer the list of countries striking bilateral deals with the US becomes, the weaker the EU's future negotiating position is likely to be.